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The Firehall Scandal.What did Sam Katz know, and when did he know it?

Winnipeg Mayor Sam Katz is playing a dangerous game by intervening personally in the Fire Hall Scandal that's swirling around his friend and business partner Sandy Shindleman.

You would expect a politician to put as much distance as possible between himself and a career-ending financial controversy. Instead, Katz has jumped into the fire with both feet by ordering a blatantly biased, deliberately narrow, suicidal "investigation" of allegations of impropriety in the awarding of building contracts to his friend.

The "investigation", to be conducted by another of Katz's close friends, won't convince anyone. But it will raise questions about whether the mayor had any involvement in the conspiracy and cover-up that's at the heart of the scandal.

The Fire Hall Scandal can be divided into two parts:

* the secret land swap with Shindico Realty, and
* the secret awarding of a $15 million contract to Shindico to build four new fire stations

When the City of Winnipeg took out a loan from CMHC in 2009 to build four brand spanking new fire-paramedic stations, they told the fire department to report back with who got the contract. Instead, the deputy fire chief kept the information secret, splitting up the contract into four, one for each firehall, effectively keeping the project off city council's radar. Since each contract was worth less than $10 million, the deputy fire chief had the technical authority to spend the money on each firehall without council's approval and without telling them who was getting paid.

One fire station, in River Heights, was built on land owned by Shindico. The fire chief made a verbal deal with Shindico to swap that land for three city-owned parcels of land, a deal that wasn't known to anyone until last month.

Katz, trying to head off calls for a broader investigation, has asked the city's Chief Financial Officer Mike Ruta and the Chief Administrative Officer Phil Sheegl to allegedly determine if the land swap is a good deal for the city or if we got snookered.

Given that Sheegl and Ruta took part in an unprecedented news conference of top city administrators last Friday in which they announced that everything city officials did regarding the Fire Hall Scandal was on the up-and-up, we can guess with 100 percent accuracy their conclusion about the land swap.

On paper, Sheegl might look like a perfect candidate to weigh the relative merits of a land swap.

Sheegl has made a career in real estate and property development for almost 30 years. Before being appointed to CAO of Winnipeg, he was head of the Board of Revision, the tribunal that hears your appeal of your property assessments.

But he's a close, personal friend of Sam Katz's. He even sold Katz's house in the Eighties. They socialize together. They play sports together. Sheegl had business connections in Phoenix, Sam Katz's second home.

To have one friend "investigate" another friend just doesn't fly. In fact, how can Sam Katz be involved in any way in the Fire Hall Scandal except as a suspect? It involves his business partner. He has to recuse himself from all discussion by councillors on how to handle the scandal simply on the basis of conflict of interest.

Complicating matters even more is the comment by Sheegl this week that he was aware of the land swap before it was revealed to the public. He joked that his awareness "was at 50,000 feet", implying he was far removed from the information. Are we to take his word for it? The public suspicion is so great that Sheegl must do more than joke about what he knew, he must be specific, provide dates and witnesses.

A $15 million secret contract between friends is no joking matter.

Since our last examination of the details of the scandal, we think we've developed a better understanding of the dynamics of how it unfolded:

-  In 2009, Winnipeg originally considered building the four firehalls as private-public partnerships under which private developers would build and own the stations and lease them to the city.

-  The project was being handled by Deputy Fire Chief Reid Douglas. The Chief, Jim Brennan, was a paramedic not a firefighter and would retire in 2011, so you can see why Douglas got the task.

-  A request for proposal was issued to a group of pre-selected contractors in 2010. But by the deadline in May, only one---Shindico Realty---had responded.

-  The issue became moot two months later when city council approved taking a loan for $9.7 million from CMHC to build the four firehalls. (The city and province would top up the $15 million budget.) However, the money came from an infrastructure stimulus fund created by the federal government, and carried a stipulation that all projects be finished by March 31, 2012.

This is their out. They will argue that faced with this deadline, they didn't have time to put the contract out for new bids. They reached into the drawer, took out Shindico's RFP response, and gave them the contract.

Or, rather, contracts.

Because Douglas split the big project up into four smaller projects.

Did he deliberately defy city council by denying the knowledge of who got the project? Or will he argue that it was an oversight, again because of time constraints?

Nevertheless, there seems to have been a deliberate conspiracy to hide the details of the replacement for Fire Station No. 12 in River Heights. While you can find news stories telling where the other 3 firehalls were going to be built, there's never any location for F.S. 12 until after.

It didn't matter when the firehalls were going to be 3P. In fact, building the River Heights station on their own Shindico land gave them an edge in bidding. But once the rules changed, the land issue became touchy.

Maybe Shindico didn't want to sell the land on Taylor where the fire hall was eventually built. Maybe they tried to hang onto the idea of owning the land and leasing it. That wouldn't fly. The city couldn't build a fire station on land it didn't own, could it? Ha ha.

So is that when the land swap entered the picture? But land swap was a dirty word, especially when wedded to Taylor Avenue.
City council faced an unexpected wave of opposition in 2009 when it revealed it had approved a land swap with a developer under which he got 25 hectares of land near Taylor and Waverley, in exchange for four hectares he owned along the Fort Rouge railway yards. The developer was planning to build 3,500 townhouses, which the city's property manager at the time, Phil Sheegl, thought was a great idea because of all the taxes it would bring.

And, wouldn't you know it, during the 2010 civic election, the issue was raised all over again. You wouldn't want to raise another land swap when one land swap controversy already threatened to swamp the mayor, would you?

By late March, 2011, Reid Douglas told the press there were "ongoing negotiations" regarding the River Heights firehall. In September, 2011, he said construction was expected to start by "the end of the month", although where, he didn't say.

Interestingly, it wasn't until November, 2011 that Shindico got the contract for Fire Station No. 12, and not until August, 2012 that that contract was made public on the city's website.

But somebody was getting nervous in late '11. On February 2, 2012, a caveat was filed by the city on the land where the fire station was being built binding the city to buy the land for $990,000.

Reid Douglas now says that if city council rejects the land swap, they've got to pay Shindico its asking price for the land holding the firehall.

How much of this did Phil Sheegl know? How much did Sam Katz know?
Was his business partner involved in a $15 million project and they didn't have a beer and talk about it, mano a mayoro? Did his other close friend find out about it and not mention it over a hot dog at the ballpark?

The Sheegl-Ruta investigation is designed to ward off questions like that.
Katz will wave the final report around and say "look, we investigated, everything was kosher."

No. Not good enough.

There needs to be a complete examination of how Shindico got preferred treatment and how city council was kept in the dark.

But who will conduct the inquiry?

At first glance, the obvious choice is the city's Standing Committee on Protection. But look at the members. Thomas Steen, so low-key as to be invisible and speaking broken English; Harvey Smith, crippled by his age and health problems; Ross Eadie, saddled with his own ethics questions arising from the 2010 election campaign and his involvement in O'Learygate. 

That leaves chairwoman Paula Havixbeck, who can be challenged because she received a campaign contribution from Sandy Shindleman.

A better choice would be Gord Steeves, the former chairman of Protection Committee
, who resigned to run (unsuccessfully) in the 2010 provincial election.

As an 11-year veteran of city council, he knows the rules and the players. He was there when council ordered Reid Douglas to bring the winner of the firehall contract to them for approval. He's out of council now, so he doesn't have a stake in the outcome of any investigation.

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